Why do stock markets react on China figures they do not trust? - Heleen Mees

Heleen Mees

Despite severe doubts about the trustworthiness of China's growth figures, they still have a major impacts on stock markets. Economist Heleen Mees dived into the dilemma and explains in Project Syndicate why we should take them serious anyway. Heleen Mees:

Regardless, official Chinese economic data should not be discounted. Skeptics often cite the discrepancy between reported GDP growth and energy demand, specifically the contraction in electricity consumption. But, as Rachel Ziemba of Roubini Global Economics points out, these discrepancies fall well within the margin of error. Using historical data on electricity use, Ziemba shows that reported growth rates for 2009 are plausible, despite falling electricity production. 

In fact, less energy-intensive Chinese growth should be a welcome development. In 2011, per capita carbon emissions in China were similar to emissions in the European Union, even though per capita income in China, measured in purchasing-power-parity (PPP) terms, was roughly one-fourth of that in the EU... 

Skepticism about official Chinese data may help the West to assuage its unease about China’s rise, but it eventually will have to come to grips with economic reality. China’s official numbers may bend the truth, but they don’t lie.

More arguments in Project Syndicate.

Heleen Mees is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers request form

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